IDEAS home Printed from https://ideas.repec.org/a/ags/eeaeje/259289.html
   My bibliography  Save this article

The Effect of Improved Productivity of the Manufacturing Industries on the Ethiopian Economy: a Computable General Equilibrium (CGE) Analysis

Author

Listed:
  • Bethelehem Berhane Kidane

Abstract

Ethiopia’s manufacturing industry is at the onset of development though there are recent upsurges in the number of firms. This study examines the effect of productivity improvement of the manufacturing sector on the macro economy, sectoral output, factor and household income and welfare of households. In order to investigate this, the study utilized the recursive dynamic computable general equilibrium (CGE) model. The recently updated 2005/06 Ethiopian SAM was used to calibrate the CGE framework. Three policy simulations of high, medium and low TFP growth rates were simulated on agro processing, non-agro processing and overall manufacturing activities. The study demonstrated that the manufacturing sector is a key driver of economic growth in particular; the findings suggest that productivity increase in agro processing, non-agro processing and overall manufacturing sector largely increases real GDP and sectoral outputs. Moreover, both rural and urban households are well-off in all the policy simulations. The study further extends its recommendation for Ethiopia to develop a strong industrial policy aimed towards promoting both agro and non-agro processing industries.

Suggested Citation

  • Bethelehem Berhane Kidane, 2014. "The Effect of Improved Productivity of the Manufacturing Industries on the Ethiopian Economy: a Computable General Equilibrium (CGE) Analysis," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 22(1), November.
    • Handle: RePEc:ags:eeaeje:259289
    DOI: 10.22004/ag.econ.259289
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/259289/files/Bethelehem%20Berhane%20Kidane_The%20Effect%20of%20Improved%20Productivity%20of%20the%20Manufacturing%20Industries.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.259289?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. A. P. Thirlwall, 2015. "A Plain Man’s Guide to Kaldor’s Growth Laws," Palgrave Studies in the History of Economic Thought, in: Essays on Keynesian and Kaldorian Economics, chapter 14, pages 326-338, Palgrave Macmillan.
    2. Stanley L. Engerman & Kenneth L. Sokoloff, 1994. "Factor Endowments: Institutions, and Differential Paths of Growth Among New World Economies: A View from Economic Historians of the United States," NBER Historical Working Papers 0066, National Bureau of Economic Research, Inc.
    3. M. Chatterji & Michael R. Wickens, 1983. "Verdoorn’s Law and Kaldor’s Law: A Revisionist Interpretation?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 5(3), pages 397-413, March.
    4. Weiss, John, 2011. "Industrial Policy in the Twenty-First Century," WIDER Working Paper Series 055, World Institute for Development Economic Research (UNU-WIDER).
    5. John Weiss, 2011. "Industrial Policy in the Twenty-First Century: Challenges for the Future," WIDER Working Paper Series wp-2011-055, World Institute for Development Economic Research (UNU-WIDER).
    6. Devarajan, Shantayanan & Robinson, Sherman, 2002. "The influence of computable general equilibrium models on policy," TMD discussion papers 98, International Food Policy Research Institute (IFPRI).
    7. Lin, Justin Yifu & Monga, Celestin, 2010. "The growth report and new structural economics," Policy Research Working Paper Series 5336, The World Bank.
    8. Daron Acemoglu, 2007. "Introduction to Modern Economic Growth," Levine's Bibliography 122247000000001721, UCLA Department of Economics.
    9. Bautista, Romeo M. & Robinson, Sherman & El-Said, Moataz, 1999. "Alternative industrial development paths for Indonesia: SAM and CGE analyses," TMD discussion papers 42, International Food Policy Research Institute (IFPRI).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Josif Iliev, 2014. "The process of reindustrialisation – a strategic challenge to national economy," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 3-14,15-25.
    2. Drakopoulos, Stavros & Theodossiou, Ioannis, 1991. "Kaldorian Approach to Greek Economic Growth," MPRA Paper 48989, University Library of Munich, Germany.
    3. Álvaro Martín Moreno Rivas, 2008. "Las leyes del desarrollo económico endógeno de Kaldor: el caso colombiano," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 10(18), pages 129-147, January-J.
    4. Florian Schaefer & Girum Abebe, 2015. "The case for industrial policy and its application in the Ethiopian cut flower sector," Working Papers 012, Policy Studies Institute.
    5. Kejing Chen & Qiaoshuang Meng & Yutao Sun & Qingqing Wan, 2024. "How does industrial policy experimentation influence innovation performance? A case of Made in China 2025," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.
    6. Antoine AUSSEUR & Clémence VERGNE, 2017. "La croissance de l’Afrique subsaharienne : diversité des trajectoires et des processus de transformation structurelle," Working Paper 7437bebd-62f2-482f-8cc9-d, Agence française de développement.
    7. Justin Doran & Bernard Fingleton, 2014. "Economic shocks and growth: Spatio-temporal perspectives on Europe's economies in a time of crisis," Papers in Regional Science, Wiley Blackwell, vol. 93, pages 137-165, November.
    8. Hanson, Kenneth & Somwaru, Agapi, 2003. "Distributional Effects of U.S. Farm Commodity Programs: Accounting for Farm and Non-Farm Households," Conference papers 331120, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Guido Cozzi, 2008. "Why the Rich Should Like R&D Less," Working Papers 2009_14, Business School - Economics, University of Glasgow, revised Mar 2009.
    10. Nemera Mamo & Sambit Bhattacharyya, 2018. "Natural Resources and Political Patronage in Africa: An Ethnicity Level Analysis," Working Paper Series 0418, Department of Economics, University of Sussex Business School.
    11. Harald Fadinger & Pablo Fleiss, 2011. "Trade and Sectoral Productivity," Economic Journal, Royal Economic Society, vol. 121(555), pages 958-989, September.
    12. Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1999. "Kaldor's Laws and Spatial Dependence: Evidence for the European Regions," Regional Studies, Taylor & Francis Journals, vol. 33(5), pages 443-451.
    13. Wang, Can & Deng, Mengzhi & Deng, Junfeng, 2020. "Factor reallocation and structural transformation implications of grain subsidies in China," Journal of Asian Economics, Elsevier, vol. 71(C).
    14. Angus Chu, 2010. "Effects of patent length on R&D: a quantitative DGE analysis," Journal of Economics, Springer, vol. 99(2), pages 117-140, March.
    15. Robert A. Blecker, 2009. "Long-Run Growth in Open Economies: Export-Led Cumulative Causation or a Balance-of-Payments Constraint?," Working Papers 2009-23, American University, Department of Economics.
    16. P. Sylos Labini, 1999. "The employment issue: investment, flexibility and the competition of developing countries," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 52(210), pages 257-280.
    17. Bluedorn, John C. & Valentinyi, Akos & Vlassopoulos, Michael, 2009. "The Long-Lived Effects of Historic Climate on the Wealth of Nations," MPRA Paper 18701, University Library of Munich, Germany.
    18. Luigi Pascali, 2017. "The Wind of Change: Maritime Technology, Trade, and Economic Development," American Economic Review, American Economic Association, vol. 107(9), pages 2821-2854, September.
    19. Bryan K. Ritchie, 2010. "Systemic Vulnerability and Sustainable Economic Growth," Books, Edward Elgar Publishing, number 13731.
    20. Dobado González, Rafael & García Montero, Héctor, 2010. "Colonial Origins of Inequality in Hispanic America? Some Reflections Based on New Empirical Evidence," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(2), pages 253-277, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:eeaeje:259289. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eeaa2ea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.